While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends and subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Buy." Martin Midstream Partners L.P (NASDAQ: MMLP) shares currently have a dividend yield of 7.90%. Martin Midstream Partners L.P. collects, transports, stores, and markets petroleum products and by-products in the United States Gulf Coast region. The company has a P/E ratio of 29.39. Currently there is 1 analyst that rates Martin Midstream Partners L.P a buy, no analysts rate it a sell, and 6 rate it a hold. The average volume for Martin Midstream Partners L.P has been 129,800 shares per day over the past 30 days. Martin Midstream Partners L.P has a market cap of $1.0 billion and is part of the energy industry. Shares are up 24.7% year to date as of the close of trading on Tuesday. TheStreet Ratings rates Martin Midstream Partners L.P as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins. Highlights from the ratings report include:
- MMLP's very impressive revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues leaped by 65.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MARTIN MIDSTREAM PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MARTIN MIDSTREAM PARTNERS LP increased its bottom line by earning $1.33 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.33).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 316.2% when compared to the same quarter one year prior, rising from $2.85 million to $11.87 million.
- Net operating cash flow has significantly increased by 74.54% to $50.68 million when compared to the same quarter last year. In addition, MARTIN MIDSTREAM PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of 20.23%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full Martin Midstream Partners L.P Ratings Report.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Software industry average. The net income increased by 7.9% when compared to the same quarter one year prior, going from $1.27 million to $1.37 million.
- MNDO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.64, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for MIND CTI LTD is currently very high, coming in at 71.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.69% is above that of the industry average.
- MNDO, with its decline in revenue, slightly underperformed the industry average of 1.7%. Since the same quarter one year prior, revenues slightly dropped by 6.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full Mind C.T.I Ratings Report.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- ITURAN LOCATION & CONTROL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, ITURAN LOCATION & CONTROL increased its bottom line by earning $1.18 versus $1.01 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 178.4% when compared to the same quarter one year prior, rising from $1.58 million to $4.41 million.
- ITRN's revenue growth trails the industry average of 14.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ITRN's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.
- You can view the full Ituran Location and Control Ratings Report.
- Our dividend calendar.